UAL Corp Seeks Until Jan 31 To File Exclusive Ch 11 Plan =
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Tuesday November 9, 12:04 PM EST =
CHICAGO (Dow Jones)--United Airlines has asked a bankruptcy court judge f=
or more time to work on its reorganization plan and said that its work ov=
er the next several months will be crucial to the airline's survival.
United, a unit of Chicago-based UAL Corp. (UALAQ), said in court document=
s made available this week that it wants to extend the exclusivity period=
through Jan. 31.
Exclusivity periods, which are rooted in bankruptcy law, give companies t=
ime to draft their own reorganization plans without competition from riva=
l plans filed by other parties.
United filed for bankruptcy in December 2002.
United said in its motion that its "most pressing" task ahead is labor-re=
lated cost savings. Assuming the company can achieve its targets on that =
front, the airline will then be "well positioned to intensify its pursuit=
of exit financing and to commence the formal plan process."
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Given the complexity and time necessary to complete these actions, United=
said intends to seek another exclusivity extension in January. United pr=
eviously was granted month-to-month extensions.
The airline has said it needs to achieve additional savings of more than =
$2 billion annually, including the termination of its employee pension pl=
ans. One- third of that amount will come directly from labor costs, the c=
ompany indicated, though at least one union called the new round of cuts =
"disastrous."
United said that it has worked to eliminate any ill will between the part=
ies in the case and has intensified its communication efforts with key co=
nstituents.
"The new path to exit is clear but precarious, and United must now begin =
to execute on that exit strategy," the airline said in the filing.
United's revised business plan, which was reviewed in detail with the com=
pany's board of directors on Oct. 28, still requires "significant" restru=
cturing initiatives, including cost cuts and efficiency improvements, in =
order to counter high fuel prices and increased industry competition.
"That challenging environment has produced unprecedented losses for all n=
etwork carriers during what is traditionally the most profitable time of =
year," the company said.
The airline said it hopes to reach a consensual agreement with its unions=
regarding labor cost cuts and said it will discuss details of those plan=
ned negotiations at a hearing later this month.
In addition to the labor costs, United will also "intensify" discussions =
with sources of additional non-labor savings including aircraft financier=
s, United Express partners and others.
An extension of the exclusivity period, United said, will promote a "stab=
le restructuring environment" and facilitate the quick resolution of rema=
ining issues.
-By Erik Ahlberg, Dow Jones Newswires; 312-750-4141; erik.ahlberg@dowjone=
s.com =
Dow Jones Newswires
11-09-04 1204ET
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